Retail in China has been defined by two trends: the rapid growth of e-commerce and market consolidation. The share of the market controlled by the country’s ten biggest retailers has nearly doubled since 2008, and the three largest retailers all run operations that are primarily online.

Though the United States remains the world’s biggest market for retail sales, China is the largest e-commerce market, accounting for nearly half the world’s retail e-commerce sales, according to McKinsey & Company. And the country’s online economy is now pioneering new consumer outreach methods like sales via livestream and in-app purchases on social media platforms.

This week, The Wire looks at the evolution of China’s retail market, how it stacks up to the rest of the world, and we zero in on the ownership structure of Suning.com, one of the nation’s biggest e-commerce firms.

Walmart, Walmart, Walmart

Young and exciting Chinese ventures like Pinduoduo are growing fast, but no Chinese firm can match the size of Walmart. The U.S. chain is not only the world’s largest retailer, it is also the world biggest company by annual revenue. Since its first store opened in 1962, Walmart has expanded to about 11,500 stores and it employs more than 2 million workers worldwide — including hundreds of stores and nearly 100,000 employees in China. China’s e-commerce giant Alibaba does not appear on the Deloitte list because a large portion of its revenue is made through third payment sellers on Taobao.

Big retailers are pivoting to stay on top, trying to find the right mix of e-commerce and traditional store fronts. Amazon, the only digital-first name on the top 10 list, has followed other big retailers into the grocery business with its 2017 acquisition of Whole Foods — and online grocery delivery service Amazon Fresh. Walmart, on the other hand, has invested billions in increasing its online sales, from delivered packages to in-person pickup models.

Big retailers also continue to strike gold in the United States’ big appetite for consumer goods. While the top American retailers generate most of their revenue in their home market — including Kroger, which only operates domestically — German chains Schwarz and Aldi (which opened its first supermarkets in China in 2019) make most of their profits overseas, according to Deloitte. 

In China: Who’s Who in Retail?

China’s retail scene has shifted with the times, from state run department stores to supersized malls and now the emergence of digital first e-commerce giants like Alibaba’s TMall, JD.com and Pinduoduo. Those online shopping platforms are now China’s biggest retailers — and their power is only growing. The top 100 retailers have doubled their slice of the country’s annual retail sales since 2008 — up to 20.9 percent from 10.5, according to data from the China National Commercial Information Center. The big three account for two-thirds of the sales volume among the top 100 retailers.

Consolidation is also playing out in investments and acquisitions, namely by Alibaba. In October 2020, Alibaba agreed to pay $3.6 billion to take control of Sun Art, the giant hypermarket chain. Alibaba has also spent billions of dollars in recent years to gain a stake in the giant online retailer Suning.com. 

Alibaba may be on top now, but the e-commerce giant and its sister company, the Ant Group, are under growing scrutiny from Chinese regulators over antitrust and concerns about financial risks. To better understand the e-commerce landscape, we rank the biggest retailers below, though there are major differences between the global rankings and China’s own. The figures for China’s largest retailers often include third party transactions whereas the global list above is more tied to a retailer’s own revenue.¹Alibaba’s own revenue is notoriously difficult to calculate, track or compare with other retailers. The e-commerce giant reports gross merchandise value (or GMV) and last fiscal year those sales amounted to about $1 trillion. But that is different from the revenue generated by the company, since it’s operating a platform and bringing in revenue from servicing other businesses.

Inside Suning.com

The development of Suning, the country’s fourth biggest retailer, neatly tracks the trends that have emerged in China’s retail industry: digitalization, consolidation, and of course, the influence of Alibaba. Suning.com grew out of a huge electronics and appliance retailer that pivoted to digital in 2010 by forming an online retailer: Suning.com. But since then, the company has ventured into the telecom business, live streaming, supermarkets and even sports.

The firm’s partnership with Alibaba gives them phenomenal reach throughout China, but the alliance could come under regulatory scrutiny now that Beijing is reviewing Alibaba over anti-trust concerns. In 2014, Alibaba paid $4.6 billion to acquire a large stake in Suning.com. 

The Shenzhen-listed company also has a complicated corporate structure. Its founder and biggest shareholder, Zhang Jindong, acquired a majority stake in the Italian football club Inter-Milan and soon after Suning.com because a club sponsor. Suning.com has also formed partnerships with the short-video platform Douyin, the Chinese version of TikTok. And to build its offline presence, Suning bought a majority stake in the Chinese operations of the French supermarket giant Carrefour, formed an alliance with the heavily indebted property giant Evergrande and acquired dozens of department stores from the Dalian Wanda Group.

See more about the company’s major stakeholders below.

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